In a momentous decision, the U.S. Securities and Exchange Commission (SEC) has approved eight spot Ethereum ETF applications through an omnibus order on Thursday. This action signals a growing acceptance of cryptocurrencies within the traditional finance sector, with the SEC’s approval occurring just four months after the regulator paved the way for the first spot Bitcoin ETFs.
The financial industry leaders that have received approval for their 19b-4 forms include BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton. While this initial hurdle has been cleared, these ETF issuers now face the task of ensuring that their S-1 registration statements become effective before trading can commence.
The decision has taken many market observers by surprise, as previous interactions between the regulatory body and ETF issuers did not provide any indication of imminent approvals. This has led to speculation about the catalyst for this sudden shift, with some sources pointing to recent bipartisan pressure from House lawmakers urging the SEC to align its treatment of Ethereum ETFs with its prior acceptance of spot Bitcoin ETFs.
This unforeseen decision has already had significant effects on the market, particularly for the Grayscale Ethereum Trust, which saw its discount shrink from 24% to 6% as its transition to an ETF draws nearer. The conversion will allow holders to exchange shares for the equivalent cash value of the underlying Ether. While Bitcoin ETFs have seen substantial inflows since their approval, accumulating an additional 207,000 Bitcoin ($14 billion) on top of the 621,000 Bitcoin ($42 billion) already held by the Grayscale Bitcoin Trust pre-conversion, it remains to be seen whether Ethereum ETFs will attract the same level of investor interest.
The timing of when the S-1 registration statements will become effective is currently uncertain, with some analysts speculating a turnaround within weeks while others point to historical precedents exceeding three months. The SEC’s willingness to embrace Ethereum ETFs marks a significant shift in the regulatory environment and sets the stage for a new era in the intersection of cryptocurrency and traditional finance.
